Financial data startup YCharts raises $3.8M in latest funding

Financial data startup YCharts has raised $3.875 million in its third round of funding as it makes an aggressive play for institutional customers.

The company, which is based in Chicago and New York, has now raised a total of $8.625 million. It last raised money in November 2011, when Chicago-based Morningstar led a $3.25 million round that also included local investors Hyde Park Angels and i2A Fund. Morningstar took a 20 percent stake in YCharts at that time.

For the newest fundraising round, Morningstar was again the lead investor but maintained its stake at 20 percent. The other lead investor was Reed Elsevier Ventures, the venture arm of London-based global information provider Reed Elsevier, which owns LexisNexis and other properties focused on the medical and legal sectors.

YCharts co-founder and Chief Executive Shawn Carpenter described Reed Elsevier as a "large, stable investor" that takes a longer term view of the company's strategy and has expertise in building a global information business.

"We kind of avoided the general (venture capital firms)" for the latest fundraising round, Carpenter said. "We were looking for a strong strategic partner."

YCharts launched its professional product for institutional clients in January, charging $199 a month. This platinum service offers 250,000 macroeconomic indicators and more than 2,000 metrics on publicly traded companies, as well as analysis and visualization tools on top off the data. YCharts also offers a free service and a gold membership for $49 a month, with each tier offering additional data.

Carpenter said early sales of the platinum product exceeded the company's expectations, in volume and the size of deals. The company found that of the 1 million visitors coming to YCharts' website every month, a large portion were employees of institutional customers such as consulting firms and hedge funds. YCharts' technology allows users to easily search for information and connect the data to Excel, allowing professional investors to build financial models using the data.

In moving into the institutional market, YCharts is selling its product to customers that likely own Bloomberg terminals. Carpenter said he's finding that often, a significant subset of employees at an asset management firm, for example, do not have Bloomberg machines and make good fits for the YCharts platinum product. YCharts' Web-based offering is also designed to be simpler to use than the Bloomberg terminal, whose complexity often confounds casual users.

"We see no benefits in making things hard to use," Carpenter said.

Carpenter said his company's plan is to "collect all data across all asset classes globally," a massive undertaking that will take several years.

YCharts has just under 20 employees and should be closer to 30 people by year-end, with the increase in staff split between its two offices. Most of its development team works out of New York under YCharts co-founder and Chief Technology Officer Ara Anjargolian, the Tribune Co.'s former lead developer. In Chicago, where YCharts recently moved to new offices in River North, the staff consists mostly of management, sales and marketing.

Executives at Reed Elsevier Ventures flew from London to Chicago on short notice to meet with YCharts when they were considering an investment.

"We are very bullish on YCharts and its long-term potential to transform the financial information industry," Kevin Brown, general partner at Reed Elsevier Ventures, said in a statement.